Can Red Hat Meet These Numbers?

Red Hat (NYSE: RHT  ) is expected to report Q3 earnings on Dec. 20. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Red Hat's revenues will expand 16.5% and EPS will grow 3.6%.

The average estimate for revenue is $337.9 million. On the bottom line, the average EPS estimate is $0.29.

Revenue details
Last quarter, Red Hat chalked up revenue of $322.6 million. GAAP reported sales were 15% higher than the prior-year quarter's $281.3 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at $0.28. GAAP EPS of $0.18 for Q2 were 10% lower than the prior-year quarter's $0.20 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 85.2%, 180 basis points better than the prior-year quarter. Operating margin was 15.8%, 300 basis points worse than the prior-year quarter. Net margin was 10.9%, 330 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $1.33 billion. The average EPS estimate is $1.16.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 617 members out of 752 rating the stock outperform, and 135 members rating it underperform. Among 189 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 160 give Red Hat a green thumbs-up, and 29 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Red Hat is outperform, with an average price target of $59.87.

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